Although many fear personal loans, they tend to have better financial advantages than credit cards, which is why they are an excellent option to pay off those debts.
The use of credit cards are very popular in the United States. However, many people lose sight that it is money borrowed with interest rates that they have to pay. Some make it almost impossible to rescue what they owe that they have to resort to other financial resources in order to achieve it. This is the case of personal loans designed to refinance credit card debt. We present the best 5 options that exist in the country and that could free you from a heavy burden.
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Why is it a good idea to pay off credit card debt with a loan?
Like any other service, financial institutions charge interest in exchange for personal loans, but in many cases they tend to have lower rates available than other products such as credit cards. The average annual percentage rate (APR) on a personal loan is only 9% compared to average rates on a credit card of around 14%, according to data from the Federal Reserve.
The loans have the characteristic of being an installment loan, that is, you pay the same amount every month until the loan is paid off. As CNBC mentions, knowing the exact amount you have to pay monthly can make budgeting easier, whereas with a balance transfer card, you need to set up your own payment plan. And if you don’t pay off your balance before the introductory period ends, you’ll be hit by high interest rates.
That is why we present you the 5 best loans to refinance your credit card debt.
1. Discover
They can loan you from $2,500 to $35,000 for terms ranging from 6 to 84 months. There are no fees for opening or early payments, although if you are late you will have to pay a fee of $39 dollars. Its annual percentage rate (APR) ranges from 6.99% to 24.99%, depending on your credit score.
2. Upstart
You do not need to have an excellent credit score, from 580 you could aspire to apply for the loan. It handles an interest rate of 8.27% to 35.99% APR and it can lend you from $1,000 dollars, which makes it accessible, up to $50,000 dollars, although its terms are short, the maximum being 5 years. Although it has an opening fee of 0% to 8% according to the amount and a delay fee of 5% or $ 15 dollars, depending on the amount of what you owe.
3. Marcus by Goldman Sachs
They can loan you from $3,500 to $ 40,000, in a term of 36 to 72 months and with an interest rate that ranges from 6.99% to 19.99% APR, a very accessible variability for many people. However, you need to have a good credit score to apply for a loan. There are no origination, early payment, or late fees.
4. SoFi
Without charging you fees for requesting and opening the loan, or for early or late payments, this option offers you from $5,000 to $100,000 dollars at an interest rate of 5.99% to 22.56% APR for a term that can range from 2 to 7 years. It has protection against unemployment. You require a good and excellent credit score.
5. LightStream
It handles one of the best interest rates from 2.49% to 19.99% for the longest terms that any entity can offer, from 24 to 144 months. You can receive funds from $5,000 to $100,000 the same day you request them. It does not charge opening fees, neither for early or late payment. To have these benefits you must have a good credit score, bordering on excellence.
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